A Trust is Only as Good as What You Put In It
A Revocable Livng Trust is a very valuable estate planning tool. If done properly, it can avoid probate, as well as protect you and your assets if you are incapacitated.
However, unlike a Last Will and Testament, it does not automatically apply to all of the assets that you own. When a client comes in to discuss doing a Revocable Living Trust, I analogize the Trust to a box that we are building. Typically, the first thing that we put into the box is your home. We prepare a Quit Claim Deed where we transfer your home from yourself individually to yourself as Trustee of your Trust. Your homestead remains the same, your real estate taxes remain the same, your ability to sell the property or mortgage it remain the same; however, upon your death, the property avoids probate. We also transfer non-homestead real estate to the Trust.
We then provide an instruction letter that explains what the client needs to do to transfer other assets to the Trust, such as brokerage accounts and bank accounts. You can also name the Trust as a beneficiary for IRA accounts. But it is generally up to the client (unless the attorney is hired specifically to do this administrative work) to follow-up with the banks and the brokers to be sure that the proper paperwork is completed to change the name of the account to the Trust. Usually, the financial institution will require a copy of the first page of the Trust which indicates the name and the date that it was executed. The institution may also require copies of the last pages with the witnesses and notary. The client will then complete a form with the institution which will result in the account being changed from the individual name to the name of the Trust. Future statements will then show the client’s name and the word Trustee or an abbreviation such as TTE. At that point, you know that the account is in the name of the Trust.
If this administrative work is not done, and there are no beneficiaries listed for the particular account, then the account will need to be probated in order for the Trust to get it. This is done via the “Pourover” Will that is typically executed at the same time as the Trust. This “Pourover” Will names the Trust as the beneficiary of any asset that is only in the name of the individual with no beneficiaries designated.
If you already have a Revocable Living Trust and you want your Trust to cover all of your assets, you should contact your brokers, banks, investment advisors, etc. to be sure that your Trust is either named as the beneficiary of the account (for an IRA) or that you as the Trustee are the owner of that account.
Remember, your Trust is only an empty box until you put something into it.
Please feel free to call me for a free personal or phone consultation regarding any issues pertaining to Wills, Trusts and Estates. I am also available for a free consultation regarding any issue pertaining to personal injury claims or car insurance coverage.
Serving Broward and Palm Beach Counties since 1973Be Smart!